Consumers Trading In Older Cars

Older cars with 6-figure odometer readings are ending up on dealership used-vehicle lots.

Jeffrey Schwartz’s Mota Motors certifies older vehicles.

As more consumers return to the new-car market, many of them are trading in geriatric vehicles with six-figure odometer readings.

“Trade-ins are a lot different than five years ago, that’s for sure,” says Ron MacEachern, general manager of Suburban Chrysler Jeep Dodge in Troy, MI. “People have held on to their cars. We’re seeing 6-, 7-, 8-year-old vehicles with 100,000 miles (160,000 km), up to 200,000 miles (320,000 km).”

The recession and its effects have much to do with that. Many economically stressed consumers put off car purchases. As a result, the average age of vehicles in operation peaked at 11.5 years, but has dropped to 10.8 years, according to Experian Automotive.

WardsAuto predicts light-vehicle sales of 14.4 million units this year, about 1.6 million more than 2011. As dealers sell more new vehicles, they are taking trade-ins that qualify for senior citizenship.

“We’re seeing a new definition of a high-mileage used car,” says David Duncan, president of Safe-Guard, a provider of dealership finance and insurance products. “It was 60,000 to 70,000 miles (96,000 to 112,000 km). Now it’s 80,000 to 100,000 miles (128,000 to 160,000 km).”

At one time, it was risky to buy such a vehicle because of the likelihood for breakdowns. But as vehicle quality has improved, so have vehicle reliability and longevity.

“There’s a good market for those older, high-mileage trade-ins,” MacEachern says. “A lot of dealers are holding on to them (for resale), whereas they used to wholesale them automatically.”

Adds Joe Stroffolino, used-vehicle merchandising manager at Causeway Nissan near New York City: “A lot of life is left in those cars.”

The improved actuaries have prompted a new company, Mota Motors, to certify vehicles up to 15 years old and 150,000 miles (240,000 km).

The SureSale Certified program “positively depends on the fact that cars are made better today,” Mota CEO Jeffrey Schwartz says. “We couldn’t have done this program 10 years ago.”

All major auto makers offer certified pre-owned operations, with inventories consisting mainly of late-model offlease vehicles. “We’re focusing outside of those programs,” Schwartz says. “We believe this is a game changer.”

Mota has signed up dealers to sell vehicles that are inspected and certified. Some participating dealers do their own inspections, but most are performed by independent contractors whom Mota hires.

SureSale Certified offers a limited warranty, 5-day buy-back guarantee and a free vehicle history. Premium pricing is part of the deal.

“You’d think selling certified older cars would be a challenge, and that was our initial reaction,” says Stroffolino, whose dealership now participates in the program.

“But customers want used cars with protection plans,” he says. “They say, ‘I didn’t think anything like this existed.’ And it didn’t, until recently.”

Mota doesn’t focus exclusively on cars with lots of years and miles on them, says Schwartz, who formerly headed digital marketer Autobytel.

Certification is SureSale’s centerpiece, regardless of vehicle age, he says. “Imagine two rows of cars on a dealer lot; one row consisting of as-is vehicles, the other of certified vehicles with warranties. Which row do you think will attract more shoppers?”

Ultimately, the age of trade-ins is expected to decrease. That’s fine with Suburban’s MacEachern.

“We’re anxiously awaiting the next lease cycles so we can get more late-model cars,” he says, adding, “When we have people trading in cars every two or three years, it is healthy for everybody.”

Many consumers who have kept their current vehicles for more than a decade are ready for a change in the form of a new car, says Tom Webb, chief economist for Manheim Consulting. “The new-car market is not a ‘need’ market. It’s for people who want to move up.”

Franchised and independent dealers each sold nearly 14 million used cars last year, according to Manheim. Private-party transactions accounted for the sale of 11 million more units.

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